Google reveals latest UK tax bill

Google was charged £36.4m in UK corporation tax last year, according to its latest accounts.

The US search engine giant recorded sales of £1.03bn and a pre-tax profit of £149m in the UK for the 12 months to the end of June 2016.

Like other major tech firms, Google has come under pressure over its tax arrangements.

Labour said the firm was still not paying its “fair share” of tax in the UK.

Google’s accounts also showed it hired an extra 600 workers to take its UK workforce to nearly 3,000 last year.

Analysis

Simon Gompertz, BBC personal finance correspondent

Google is adamant that it is paying the 20% rate of corporation tax on its UK profits that businesses have to pay.

But the debate over its tax affairs is likely to rumble on, because of the way in which it organises its activities across international borders.

Google declared turnover of just over £1bn in the UK in the year to last June.

But the latest accounts filed in the US by Alphabet, Google’s parent company, show UK sales of more than £6bn.

One reason for the discrepancy is that it treats its business here as a development and marketing services operation.

Sales are booked in Ireland, where the tax rate happens to be lower.

A Google spokesman said: “As an international business, we pay the majority of our taxes in our home country, as well as all the taxes due in the UK.

“We have recently announced significant new investment in the UK, including new offices in Kings Cross for 7,000 staff.”

Google agreed to pay £130m in back taxes to the UK last year, which was widely criticised as not being enough.

The sum covered money owed since 2005 and followed a six-year inquiry by Her Majesty’s Revenue and Customs (HMRC).

George Osborne, who was chancellor at the time, described the deal as a “victory”, but Labour’s John McDonnell said the sums were “trivial”.

The agreement came after years of criticism of Google and other multinational firms over their tax arrangements in the UK and across Europe.

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Image caption
Shadow Chancellor John McDonnell said Google paid a lower tax rate than many working families

Mr McDonnell said the latest figures showed Google was still not paying enough tax.

He said: “It is a national disgrace that by paying just £36m in tax Google could have an effective tax rate lower than many working families in our country.

“And it exposes the complacency at the heart of this Tory government, which is allowing this to still continue despite last year’s scandal.”

He added: “It seems that the so called ‘successful’ tax deal with Google that George Osborne boasted about last year has meant that they are still not paying their fair share under his successor Philip Hammond.”

HMRC declined to comment on Google’s tax payment, saying it did not discuss identifiable taxpayers.

An HMRC spokesman said: “Everyone has to pay the tax due under the law and we do not settle for less.

“Our most recent figures show that HMRC brought in a record £26bn in extra tax for our public services, with £7.3 billion of that total coming from the 2,100 largest and most complex businesses in the UK.”